Capstone Infrastructure Enters into Agreement for iCON Infrastructure Partners III to Acquire all of the Common Shares of Capstone for $4.90 in Cash per Share

TORONTO, ONTARIO--(Marketwired - Jan 20, 2016) - Capstone Infrastructure Corporation ("Capstone" or the "Corporation") (CSE.TO) (CSE-DBA.TO) (CSE-PA.TO) (TSX:CPW.DB) announced today that it has entered into a definitive arrangement agreement (the "Arrangement Agreement") with Irving Infrastructure Corp., a subsidiary of iCON Infrastructure Partners III, L.P. ("iCON III"), a fund advised by London, UK-based iCON Infrastructure LLP ("iCON Infrastructure"), that provides for the acquisition of all issued and outstanding common shares of Capstone and Class B exchangeable units of Capstone's subsidiary MPT LTC Holding LP for $4.90 cash per share or unit, as applicable. The acquisition will be completed by way of a plan of arrangement (the "Arrangement") under the British Columbia Business Corporations Act ("BCBCA"). The total equity value of the transaction is approximately $480 million.

The purchase price represents a 44% premium to the closing price of Capstone's common shares of $3.40 on January 19, 2016, and a 61% premium to the closing price of Capstone's common shares on the trading day prior to the November 23, 2015 announcement that Capstone was undertaking a strategic review process.

As previously announced by Capstone on November 23, 2015, Capstone had retained RBC Capital Markets and TD Securities Inc. to assist management and the Board of Directors in reviewing and considering various alternatives involving the Corporation. Following this comprehensive review, Capstone entered into the Arrangement Agreement, which was unanimously approved by the Board of Directors of Capstone.

Both financial advisors to Capstone have rendered fairness opinions that, as at January 20, 2016, subject to certain assumptions, qualifications and limitations, the consideration to be received by the common shareholders and convertible debenture holders of Capstone pursuant to the Arrangement Agreement is fair, from a financial point of view, to Capstone's common shareholders and convertible debenture holders, respectively. The Board of Directors and executive officers of Capstone have entered into customary voting support agreements in favour of the transaction.

The Board of Directors of Capstone unanimously recommends that common shareholders, holders of Class B exchangeable units, and holders of convertible debentures vote in favour of the resolution approving the Arrangement at the special meeting of shareholders, Class B exchangeable unit holders and debenture holders to be called to approve the transaction.

"Capstone has concluded a comprehensive review process that considered value maximization alternatives. The Board of Directors believes the offer from iCON Infrastructure is in the best interests of all securityholders," said Board Chairman V. James Sardo. "Our goal has been to grow the company to benefit from the immense opportunities in the infrastructure sector and we are pleased that iCON Infrastructure recognizes the inherent value of Capstone's assets."

Paul Malan, Senior Partner of iCON Infrastructure, said: "The Capstone team has successfully built and managed a high quality portfolio of assets across Canada and Europe over the long term. Capstone's portfolio of assets is an excellent fit for iCON Infrastructure. We look forward to pursuing the continued growth of the business for many years to come."

Transaction Details

The completion of the transaction is subject to court approval pursuant to the BCBCA and the approval of Capstone's securityholders. Implementation of the Arrangement will be subject to the approval of 66 2/3% of the votes cast by (i) common shareholders, and (ii) common shareholders and Class B exchangeable units present in person or by proxy at the special meeting of securityholders. The transaction is also subject to customary closing conditions, including receipt of all regulatory approvals, including under the Competition Act (Canada) and the Investment Canada Act. The transaction is not subject to any financing condition.

The Arrangement Agreement also provides for customary Board of Directors support and non-solicitation covenants.

Under the Arrangement, it is proposed that Capstone's 6.50% convertible unsecured subordinated debentures due December 31, 2016 will be redeemed for 101% of their principal amount and Capstone Power Corp.'s 6.75% extendible convertible unsecured subordinated debentures due December 31, 2017 will be converted into common shares of Capstone in accordance with the cash change of control provisions of the debenture indenture governing such debentures and then immediately acquired by Irving Infrastructure Corp. at a price of $4.90 per share, in each case plus accrued and unpaid interest on the debenture until the Effective Date. Pursuant to the Arrangement Agreement, holders of the debentures will be asked to vote on the Arrangement, with each series of debentures voting as a separate class. However, completion of the Arrangement is not conditional on receipt of either of such approvals. If the requisite debenture holder approval is not obtained, such debentures will be excluded from the Arrangement and dealt with in accordance with their terms. For a series of debentures to be part of the Arrangement, the resolution approving the Arrangement must be approved by holders of not less than a majority in number and not less than 75% of the principal amount of such debentures present in person or by proxy at the special meeting of securityholders.

Capstone's previously announced fourth quarter 2015 dividend will be paid to common and preferred shareholders on January 29, 2016, but no further dividends will be declared to common shareholders in anticipation of the consummation of the transaction. Quarterly dividends are expected to be declared to preferred shareholders on a continuing basis and those shares will continue to be listed and trade on the Toronto Stock Exchange following closing of the Arrangement.

Capstone expects to hold a meeting of securityholders to consider the resolution approving the Arrangement in mid-March 2016, and if approved, to complete the transaction in April 2016 following receipt of regulatory approvals.

Further details regarding the terms of the transaction are set out in the Arrangement Agreement and will be provided in a management information circular which will be available under the profile of Capstone at www.sedar.com.

Advisors

RBC Capital Markets and TD Securities are acting as financial advisors to Capstone, with Blake, Cassels & Graydon LLP acting as legal counsel to Capstone. CIBC World Markets and Scotia Capital are acting as financial advisors to iCON III, with Osler, Hoskin & Harcourt LLP acting as legal counsel.

About Capstone Infrastructure Corporation

Capstone's mission is to provide investors with an attractive total return from responsibly managed long-term investments in core infrastructure in Canada and internationally. The company's strategy is to develop, acquire and manage a portfolio of high quality utilities, power and transportation businesses, and public-private partnerships that operate in a regulated or contractually-defined environment and generate stable cash flow. Capstone currently has investments in utilities businesses in Europe and owns, operates and develops thermal and renewable power generation facilities in Canada with a total installed capacity of net 468 megawatts. Please visit www.capstoneinfrastructure.com for more information.

About iCON Infrastructure

iCON Infrastructure is an independent investment firm focused on investments in infrastructure businesses across Europe and North America with over EUR1 billion under management. In April 2015, iCON closed its most recent infrastructure investment fund iCON III, with commitments of over EUR800 million from a diversified group of leading institutional investors from Europe, North America, the Middle East and Asia. iCON Infrastructure's other funds manage a diversified portfolio of investments in the energy, regulated utilities and transportation sectors across Europe and North America. Further information in relation to iCON Infrastructure and its investments is available at www.iconinfrastructure.com.

Notice to Readers

Certain of the statements contained within this document are forward-looking and reflect management's expectations regarding the future growth, results of operations, performance and business of Capstone Infrastructure Corporation (the "Corporation") based on information currently available to the Corporation. Forward-looking statements and financial outlook are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements and financial outlook use forward-looking words, such as "anticipate", "continue", "could", "expect", "may", "will", "intend", "estimate", "plan", "believe" or other similar words. These statements and financial outlook are subject to known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and financial outlook and, accordingly, should not be read as guarantees of future performance or results. The forward-looking statements and financial outlook within this document are based on information currently available and what the Corporation currently believes are reasonable assumptions, including the material assumptions set out in the management's discussion and analysis of the results of operations and the financial condition of the Corporation ("MD&A") for the year ended December 31, 2014 under the heading "Results of Operations", as updated in subsequently filed MD&A of the Corporation (such documents are available under the Corporation's SEDAR profile at www.sedar.com).

Other potential material factors or assumptions that were applied in formulating the forward-looking statements and financial outlook contained herein include or relate to the following: that the business and economic conditions affecting the Corporation's operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity, regulations, weather, taxes and interest rates; that dividends will continue to be paid on the preferred shares; that the meeting of securityholders will occur in mid-March 2016; that the Arrangement will be completed in April 2016, that there will be no material delays in the Corporation's wind development projects achieving commercial operation; that the Corporation's power infrastructure facilities will experience normal wind, hydrological and solar irradiation conditions, and ambient temperature and humidity levels; that there will be no material changes to the Corporation's facilities, equipment or contractual arrangements; that there will be no material changes in the legislative, regulatory and operating framework for the Corporation's businesses; that there will be no material delays in obtaining required approvals for the Corporation's power infrastructure facilities, or Värmevärden; that there will be no material changes in rate orders or rate structures for Bristol Water; that there will be no material changes in environmental regulations for the power infrastructure facilities, Värmevärden or Bristol Water; that there will be no significant event occurring outside the ordinary course of the Corporation's businesses; the refinancing on similar terms of the Corporation's and its subsidiaries' various outstanding credit facilities and debt instruments which mature during the period in which the forward-looking statements and financial outlook relate; market prices for electricity in Ontario and the amount of hours Cardinal is dispatched; the price Whitecourt will receive for its electricity production considering the market price for electricity in Alberta, the impact of renewable energy credits, and Whitecourt's agreement with Millar Western, which includes sharing mechanisms regarding the price received for electricity sold by the facility; the re-contracting of the PPA for Sechelt; that there will be no material change from the expected amount and timing of capital expenditures by Bristol Water; that there will be no material changes to the Swedish krona to Canadian dollar and UK pound sterling to Canadian dollar exchange rates; and that Bristol Water will operate and perform in a manner consistent with regulatory assumptions of the final regulatory outcome for AMP6, including, among others: real and inflationary changes in Bristol Water's revenue, Bristol Water's expenses changing in line with inflation and efficiency measures, and capital investment, leakage, customer service standards and asset serviceability targets being achieved.

Although the Corporation believes that it has a reasonable basis for the expectations reflected in these forward-looking statements and financial outlook, actual results may differ from those suggested by the forward-looking statements and financial outlook for various reasons, including: risks related to the Corporation's securities (dividends on common shares and preferred shares are not guaranteed; volatile market price for the Corporation's securities; shareholder dilution; and convertible debentures credit risk, subordination and absence of covenant protection); risks related to the Corporation and its businesses (availability of debt and equity financing; default under credit agreements and debt instruments; geographic concentration; foreign currency exchange rates; acquisitions, development and integration; environmental, health and safety; changes in legislation and administrative policy; and reliance on key personnel); risks related to the Corporation's power infrastructure facilities (power purchase agreements; completion of the Corporation's wind development projects; operational performance; contract performance and reliance on suppliers; land tenure and related rights; environmental; and regulatory environment); risks related to Värmevärden (operational performance; fuel costs and availability; industrial and residential contracts; environmental; regulatory environment; and labour relations); risks related to Bristol Water (Ofwat price determinations; failure to deliver capital investment programs; economic conditions; operational performance; failure to deliver water leakage target; SIM and the serviceability assessment; pension plan obligations; regulatory environment; competition; seasonality and climate change; and labour relations); and risks related to completion of the Arrangement . For a comprehensive description of these risk factors, please refer to the "Risk Factors" section of the Corporation's annual information form dated March 24, 2015, as supplemented by disclosure of risk factors contained in any subsequent annual information form, material change reports (except confidential material change reports), business acquisition reports, interim financial statements, interim managements' discussion and analysis and information circulars filed by the Corporation with the securities commissions or similar authorities in Canada (which are available under the Corporation's SEDAR profile at www.sedar.com). There can be no assurance that the Arrangement will occur. The proposed Arrangement is subject to various regulatory approvals, including approvals under the Competition Act (Canada) and Investment Canada Act, and the fulfillment of certain conditions, and there can be no assurance that any such approvals will be obtained and/or any such conditions will be met. The proposed Arrangement could be modified, restructured or terminated.

The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements and financial outlook. The forward-looking statements and financial outlook within this document reflect current expectations of the Corporation as at the date of this document and speak only as at the date of this document. Except as may be required by applicable law, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statements and financial outlook.

This document is not an offer or invitation for the subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of any investors. Before making an investment in the Corporation, an investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary.

Contact:

Capstone
Aaron Boles
Senior Vice President, Communications and Investor Relations
(416) 649-5009
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iCON Infrastructure
Paul Malan
Senior Partner
+44 20 7292 9670
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